RMC Slam Dunks the Competition Achieving Dealer at $42mm in 8 years
By Darrell Amy
imageSource Magazine | Volume 9, Issue 8, August 2007
Gaining significant growth in new markets without any base is supposed to be impossible—especially if you want to make any profit. With over 80 percent of the market locked in leases, conventional wisdom says that the only way to grow larger is by acquiring an existing base.
Well, try telling that to Greg Martin of Ray Morgan Company ("RMC") and you will hear quite a different story. The company grew from $9 million to $42 million in just eight years. How? By opening stores in new markets with a zero base, using a solution sales strategy!
I know it feels or seems less likely today to find virgin territories ripe for new opportunities, but there are many still to be had found in yet untapped niche markets or in finding ways to recreate a better "mouse trap" that clients demand, and that you can fill in a variety of new ways. You may need to modify your current business model while the industry continues to progressively transition, but finding new approaches and solutions to satisfy hungry customers is always possible when your agenda has you determined to succeed, just as Ray Morgan did back in the ‘50s, as well as the ensuing company today.
Ray Morgan originally worked for a stationary store. In 1956, 3M approached the store to sell its Thermocopy machines. While the storeowner wasn't interested, Morgan saw an opportunity. A week later, he was doing cold call demos and selling 3M copiers to local businesses.
Jim Scarff started with Ray in 1970, and is currently the CEO. Greg Martin, the current President, came to the company in 1980, the year the company took on the Canon line. He hit the streets selling Canon copiers, and a picture of his first worn-out pair of dress shoes sits in his office.
When Martin interviewed with the company, Scarff placed his wallet on the desk between them and said that if a customer came in and claimed that wallet as theirs, it would be given to them every time even though you know it is really yours. Martin saw him explaining that to a candidate just the other day. In Scarff's office he has an inscription on the wall that reads, "The harder I work the luckier I get." These philosophies embody the company's success.
The company started with three offices in Marysville, Chicot and Redding. When Canon opened up their distribution strategy to multiple dealers in 1998, the company was initially concerned about new Canon competitors. However, they quickly realized that this would be a great opportunity to grow RMC into other cities. They opened an office in Sacramento, California in 1999. Next, they began expanding into new markets each year with new offices in Stockton (2002), San Luis Obispo/Visalia (2004), and Fresno (2005). Most recently, the company opened an office in Reno, Nevada. Today, RMC has over 210 employees and expects to do $42 million dollars in sales.
All of the company's growth has been through opening up new offices, recruiting people and getting new business. Ray Morgan Company has never purchased a customer base.
"Our key to success is going to a market where no one has ever heard of Ray Morgan Company and then grow our solutions methodology and process," says Martin. "The DocuAudit™ process is the key strategy that we have used to net new business."
When the company goes into a new market they train their sales people to call on the financial decision maker. The first questions they ask this decision maker relate to the overall business, not to copiers. For example:
"Tell me about your business."
"What are your key strategic goals for the next 12 months."
The answers are usually fairly predictable:
- "We want to be more profitable."
- "We need to grow our company."
- "We need to look at reducing our costs."
- "We have a large labor expense."
- "We are taking on this new product."
Next, the sales representative asks two powerful questions:
- "What methodologies have you identified to reach those goals?"
- "Have you ever closely evaluated your document technology process in order to reach one of those goals?"
Typically, the answer is "no." This tees up the ball for a compelling close:
"That's why I'm here. We've been able to help other businesses in the area reach similar goals by evaluating their document technology processes and by providing recommendations to reduce costs, increase profits, and streamline your workflow."
Then, go down the line of identifying the milestones and the process for the assessment.
At this point many dealers may try to charge the client for the assessment. Martin instead believes in simply getting a commitment from the client:
"To do all of this work for you, consulting firms would typically charge a lot of money up front to do this. But I'm going to do this for you and won't charge you up front, but here is the commitment I need. I need to know that if I provide that solution and it makes sense to you financially, that we can do business—and that we can do it within the time frame that we mutually agree upon."
He asked if he could come by for a tour of the office to see if there were ways he could help. On the tour, Martin was amazed at the opportunity. At the end of the brief tour, he told the partner that he thought he could save the firm money and increase their productivity. They then did one of their first assessments. About two and a half months later, they walked out with a $350,000 sale.
"When we perform the analysis, we are able to create a viable partnership where we can deliver more value, thus keeping the account as a long term client."
Today, the DocuAudit™ assessment is the foundation of RMC's sales processes. The following is how a typical engagement works:
Once the customer agrees to the assessment, the sales person lays the ground work for the assessment. They ask the client for their authority to gather the information. They set a second appointment to review the results. Then, they work backwards from that appointment date to determine the steps to prove the potential savings and benefits.
The sales rep and the client develop agreed upon milestones for the assessment. After each one is achieved, the client will receive an email informing them of the progress.
The sales person also asks for an introduction to the key people they need to meet for the assessment such as IT, accounts payable, purchasing and any relevant department heads. One of the easiest ways they have found to do this is to have the "project champion" send out an email to all of the relevant parties with the sales rep copied in. Then the sales rep can schedule the appointments.
Before the sales rep leaves, they ask the client to install LMI software to begin gathering meter counts. This information is uploaded to the DocuAudit™ software. This allows the sales rep to do a complete assessment. The end result is a professional report that is credible to the client. "This software is a great tool because it gives you a full spectrum that includes all of the equipment and the costs of the workflow, including things like the cost of generating an invoice," says Martin.
Interviews include questions about equipment usage and workflow. The goal is to discover areas where productivity can be enhanced and costs reduced.
Another question we ask the financial decision maker is, "Do you consider labor savings when it comes to investing in technology?" If the client says "yes" then we are able to provide recommendations to save both hard costs and the soft costs of productivity.
If they say "No, we don't consider labor costs," then the sales rep notes new technologies in the office like flat screen computer monitors and asks the client how they justified that investment. The goal is to bring the client to a point where they acknowledge the importance of considering labor in the evaluation.
"Our competitors may talk the talk but they do not walk the walk. Most of them are simply doing a glorified cost analysis." We succeed because we take a bigger
perspective that includes information management, the corporate culture, and the overall workflow.
Once the information is gathered, we put together a report and present the summary to the client.
Small company audits typically require two to three hours with the client and two to three hours to assemble the report. Larger companies may take 15 to 20 hours. The first time someone does an audit it might take more hours. But it only takes a few assessments for the reps to become comfortable with the process.
The company's assessment process takes a hybrid approach that includes both print management and workflow solutions. In fact, the company's solutions division, TCI, expects annual revenues of over $5 million within the next three years, according to Kern Lehman, the division's President.
Software offerings include Canon imageWare. "We have been a loyal, exclusive Canon partner and it has really paid off," Martin reflects. "They have also formed many great alliances to help make the workflow and solution to become a reality." Martin credits Canon's support and ability to come to market with cutting edge products to have been a tremendous benefit to their growth and success.
The company also markets workflow solutions from LaserFiche, Adobe and eCopy. The Adobe eForms application has been an important part of most solutions. Many installations also include LAN faxing and fax servers to reduce the cost of communication. The company has also implemented variable data solutions and cluster printing systems.
1. Make Solutions A Core Part of Your Culture
"Some reps will come in and want to do things the old-fashioned way," says Martin. However, the concept of selling solutions is not that hard. It's simply taking the time to understand the client's business. Initially, reps tend to want to take shortcuts around the DocuAudit™ process. Once the reps see it work, they are sold.
2. Foster a Competitive Sales Culture
"We want people who are competitive. We tend to have a lot of "wanna be" athletes and ex-jocks. Friday mornings about 7:00am you'll find some of the sales team playing basketball. The will to win in a professional way is powerful."
3. Take the Ego Out of Management
Try flipping the organizational pyramid upside down. Martin feels that his role is to serve his employees, providing an environment that promotes respect for others through ethical morality and family values. Their company is somewhat Christian-based and where everyone is seen as a partner. "We work to serve our internal and external customers with humility. When you do this, it seems like the money just takes care of itself."
Ray Morgan Co. used to have a 30 day sales training boot camp for new sales reps. But after sales reps would go into the field and forget the things that they had been taught, he changed his approach. Instead of lengthy training, the company offers support. New reps are only responsible for securing the assessment. Then the company brings in a team of support people from the dealership to assist. This allows the sales rep to learn right on the job site. Once the rep is competent, they are able to conduct the audits by themselves.
Hiring New Reps
Ray Morgan Co. will not hire a sales representative until they have memorized the DocuAudit script. The sales rep is then required to make 10 follow up phone calls on letters that were sent out prior. "It's amazing how certain people we were so set on hiring just couldn't do the calls during the interview," recalls Martin. “Now when we hire someone, we learn who is comfortable on the phone and doesn't have call reluctance.”
The Future
Ray Morgan Company has used this solutions strategy for seven years now and it is paying off in lots of ways. "If you look at our growth," says Martin, "most of it has come as a result of this strategy." The company continues to grow and is currently building a 20,000 square foot facility in Sacramento. "We want this to be a state-of-the-art facility in our industry."
Martin is excited about the overall future of the company. "We love our employees. We love our customers. We think we are making an impact and helping people with their businesses. As a result, we take pride in what we do, and have a lot of fun with it along the way."
Darrell Amy is President of Dealer Marketing Systems (www.dealermarketingsystems.com), a company providing consulting, sales training and marketing services to help dealers succeed in the emerging solutions market. Darrell can be contacted at either 214-224-0050 or emailed at damy@dealermarketingsystems.com.
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